《会计英语》课程教学课件（PPT讲稿）Unit 09 Liabilities & Owner’s equity

Unit 9Liabilities&Owner'sequityassets = liabilitie s + owner'seguity

Unit 9 Liabilities & Owner’s equity assets = liabilitie s + owner'sequity

I.Liabilities A liabilityis apresent obligationreguiring thefuture payment of anasset,the future performance ofservice,or thecreation of anotherliability. Inaccordancewith paymentperiodliabilitiescanbeclassifiedintocurrentliabilitiesand non-currentliabilities

2 Ⅰ. Liabilities  A liability is a present obligation requiring the future payment of an asset, the future performance of service, or the creation of another liability.  In accordance with payment period, liabilities can be classified into current liabilities and non-current liabilities

1.CurrentliabilitiesDefinition口Current liabilitiesaredebtsthat aredue and mustbepaid withinoneyearor theoperatingcyclelongerthanayear.Such obligations will typically involve the use ofcurrent assets,or providing of some service国PurposeItsexistenceisto meetthe demand ofthebusinessnormalturnover.口ContentAccountsPayable,NotesPayable,InterestPayable,TaxPayable,etc3

3 1.Current liabilities  Definition Current liabilities are debts that are due and must be paid within one year or the operating cycle longer than a year. Such obligations will typically involve the use of current assets, or providing of some service.  Purpose Its existence is to meet the demand of the business’ normal turnover.  Content Accounts Payable, Notes Payable, Interest Payable, Tax Payable, etc

(1)AccountPayableDefinitionAccountspayable are short-termobligation owed to the suppliers forpurchasingmaterials,merchandiseorservices.The timeto record accountspayableisusuallyin accordancewithinvoicesorbillsreceived/

4 (1)Account Payable  Definition Accounts payable are short-term obligation owed to the suppliers for purchasing materials, merchandise or services. The time to record accounts payable is usually in accordance with invoices or bills received

AccountingTreatment门It shouldberecordedat the amountpayable.If cashdiscountis availableit shouldbereflectedintherecording entries口ExampleAbusinesspurchasesabatchofmaterialsof $50,000withatermof2/10.n/30.5

5  Accounting Treatment It should be recorded at the amount payable. If cash discount is available, it should be reflected in the recording entries.  Example A business purchases a batch of materials of $50,000 with a term of 2/10, n/30

When the liability occurred口50,000Dr.MaterialCr.AccountsPayable50,000If thepayment was madewithin10 daysDr.Accounts Payable50,00049,000Cr.CashPurchase Discount1,000Ifthepaymentwasmadeafter10days日Dr.AccountsPayable50.00050,000Cr.Cash6

6  Dr. Material 50,000 Cr. Accounts Payable 50,000 When the liability occurred If the payment was made within 10 days If the payment was made after 10 days  Dr. Accounts Payable 50,000 Cr. Cash 49,000 Purchase Discount 1,000  Dr. Accounts Payable 50,000 Cr. Cash 50,000

(2)NotesPayableDefinitionNotesPavableareformal short-termborrowingsusuallyevidencedbya specificwrittenpromiseto payandmostlyissuedto meet short-term financing needs.Notespayableare oftenusedinstead ofaccountspayablebecausethey give thelenderwrittendocumentationoftheobligation

7 (2)Notes Payable  Definition ➢ Notes Payable are formal short-term borrowings usually evidenced by a specific written promise to pay and mostly issued to meet short-term financing needs. ➢ Notes payable are often used instead of accounts payable because they give the lender written documentation of the obligation

AccountingTreatmentNotespayabletypicallyinvolveinterests.Whenthe note is repaid,the differencebetween thecarrying amount of the note and the cashnecessary torepaythat noteisreportedasinterestexpense.WhentheliabilityoccursDr.AssetsCr.Notes PayableWhenthenoteispaid口Dr.NotesPayableInterestexpenseCr Cash8

8  Accounting Treatment Notes payable typically involve interests. When the note is repaid, the difference between the carrying amount of the note and the cash necessary to repay that note is reported as interest expense. When the liability occurs When the note is paid  Dr. Assets Cr. Notes Payable  Dr. Notes Payable Interest expense Cr. Cash

AccountingTreatmentwhenthereisaccrued interestDr.InterestExpenseCr.InterestPayable口Dr.NotesPayableInterest PayableCr. Cash9

9 when there is accrued interest  Dr. Interest Expense Cr. Interest Payable  Dr. Notes Payable Interest Payable Cr. Cash  Accounting Treatment

ExampleKroger purchased a batch of merchandise of$20,000 on May 1, and signed a 3-month, 6% noteWhentheliability occurred20.000口Dr.Merchandise20.000Cr.NotesPayable10

10  Example Kroger purchased a batch of merchandise of $20,000 on May 1, and signed a 3-month, 6% note. When the liability occurred  Dr. Merchandise 20,000 Cr. Notes Payable 20,000